Mayor Annise Parker says she is willing to consider allowing the Metropolitan Transit Authority to retain funds that pay for city transportation projects once Metro's new leadership has restored public confidence in the agency.

Soon after Metro's new chairman and four other board members take their oaths of office today, they will have to consider what to do about the “general mobility” payments to Houston for road and bridge work and similar projects. Metro's agreement with the city expires April 30.

Factors that could influence the terms of a new agreement include the city's budget shortfall, the potential need to use some of the mobility funds to support light-rail construction, and the broader question of whether a mass transit agency should be paying for public works projects focused primarily on automobiles.

Since 1987, Metro has made mobility payments totaling more than $1.6 billion — 25 percent of its 1-cent sales tax — to Houston, Harris County and other cities in the Metro service area. The payments are to continue through Sept. 30, 2014, under terms of the 2003 referendum authorizing Metro to build five new light-rail lines.

Any discussion of asking voters to permit Metro to retain this money would have to include Harris County and the 14 other cities in Metro's service area that receive the payments, Parker said. Each entity also has its own agreement with Metro on how the funds are paid.

“If, at some point, it becomes necessary for Metro to make a claim on these dollars, then we'll absolutely have the discussion, but I'm not interested in unilateral disarmament,” the mayor said, adding that this discussion won't happen until the new board members have re-established Metro's “reputation for credibility.”

In the short term, Parker said, she would like to change the terms of Metro's agreement with Houston so that the agency makes quarterly payments for Houston's share of the money, which is about 73 percent of the mobility payments.

‘Unbilled commitments'

For most of the past decade, the reimbursements were made only after contractors billed the city for them. Metro's most recent agreement with the city calls for any projects begun after Sept. 30, 2009, to be reimbursed when they are put out for bids. This is the agreement that expires April 30.

These arrangements have led to the accumulation of more than $161 million in “unbilled commitments” for projects dating to 2004 that Houston identified for general mobility funding, but that haven't reached the point where the reimbursement is due.

How the issue is resolved could affect the steps Houston takes to close its budget gap, Parker said. Uncertainty about the general mobility payments, she said, is one reason she has not yet provided budget cut targets for each city department.

Rail funding hurdles

Another factor in the decision, Parker said, is whether Metro will need to retain some of the general mobility money to support light rail construction.

A transition committee that examined Metro's finances for Parker concluded that “subordination of city payments to transit needs” is an important element of light-rail financing. Two members of the committee said this means that if funds from other sources were insufficient, Metro would be obligated to use mobility funds to help repay the bonds.

“Assuming the subordination issue is worked out, funding appears sufficient for the three-line light rail system build-out,” the transition committee wrote in a summary of its findings. Even with that funding, the team said, “hurdles remain for funding of the five-line system.”

The three lines the committee referred to are the East End, North and Southeast lines under construction now. Two others, the University and Uptown lines, are in earlier stages of development.

The 2003 referendum limited tax-based debt for the rail system to $640 million, and the agency said recently it intends to issue $2.6 billion in bonds for rail construction. Metro officials say they can support the balance of the debt with sources other than sales taxes, but some local officials and Metro critics are skeptical of this.

Parker said Metro might have to ask voters to increase the debt limit.